Loading judgment…
Facts
The assessee, an individual with pension and agricultural income, declared a total income of Rs. 9,96,060/- for the assessment year 2022-2023. The Assessing Officer made an addition of Rs. 40,90,000/- on account of cash deposits, treating them as unexplained money under section 69A read with section 115BBE of the Income Tax Act. The CIT(A) upheld the addition.
Held
The Tribunal held that the assessee had discharged the onus by producing supporting evidence for the agricultural income and the lease of land. The absence of a written lease agreement was not a fatal flaw as oral agreements are recognized under the relevant tenancy law. The addition made by the Assessing Officer was deemed arbitrary and unjustified.
Key Issues
Whether cash deposits are unexplained money or agricultural income, and if the addition is justified without a written lease agreement.
Sections Cited
69A, 115BBE, 143(3), 144B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘A’ Bench, Hyderabad
Before: SHRI VIJAY PAL RAO & SHRI MADHUSUDAN SAWDIA
ORDER
PER VIJAY PAL RAO, VICE PRESIDENT :
This appeal by the Assessee is directed against the Order dated 23.10.2025 of the learned CIT(A)-National Faceless Appeal Centre [in short “NFAC], Delhi, for the assessment year 2022-2023.
2 ITA.No.1767/Hyd./2025 2. The assessee has raised the following grounds of appeal:
3 ITA.No.1767/Hyd./2025
4 ITA.No.1767/Hyd./2025 3. The assessee is an individual and retired government servant having income from salary [pension] and agricultural income. The assessee filed his return of income for the year under consideration on 30.07.2022 declaring total income of Rs.9,96,060/-. The case of the assessee was selected for scrutiny under CASS for the reason of large cash deposit in the bank account as well as purchase and sale of properties during the year. While completing the assessment u/sec.143(3) r.w.s.144B Income Tax Act [in short "the Act"], 1961 on 22.03.2024, the Assessing Officer made an addition of Rs.40,90,000/- on account of cash deposit in the bank account treating the same as unexplained money u/sec.69A r.w.s.115BBE of the Act. The assessee challenged the action of the Assessing Officer before the learned CIT(A), but could not succeed.
4. Before the Tribunal, the learned Authorised Representative of the Assessee submitted that the assessee explained the source of cash deposit in the bank account as earned from the agricultural income from 35.96 acres of agricultural land. The learned Authorised Representative of 5 ITA.No.1767/Hyd./2025 the Assessee has submitted that the assessee has submitted land details and confirmation from the third parties along with identity proof. The land was given on lease to the farmers for cultivation and agricultural operations. The learned Authorised Representative of the Assessee has thus submitted that the assessee substantiated his claim by producing ownership of the land measuring 35.96 acres in the shape of sale deeds and income certificate received from the Government Authority during the assessment proceedings. He has referred to the copies of these records including the land holding and income certificate issued by the Government placed on page nos.121 to 313 of the paper book. In response to the show cause notice of the Assessing Officer, the assessee furnished confirmation letters of the parties who have taken the land on lease for cultivation of crops along with their identity. The learned Authorised Representative of the Assessee has referred to the submissions before the Assessing Officer placed at page nos.319 to 336 and submitted that the assessee explained all the relevant details regarding the agricultural income and 6 ITA.No.1767/Hyd./2025 source of deposit in the bank account. The Assessing Officer has insisted on the lease deed. However, the land was given to the farmers on an oral agreement and there was no written lease deeds entered into between the assessee and the farmers. Therefore, the documents which were not in existence could not be provided to the Assessing Officer. The assessee also produced the cash flow statement before the Assessing Officer explaining the affairs of each year which are placed on page nos.314 of the paper book. Thus, the learned Authorised Representative of the Assessee has submitted that the assessee discharged his onus by producing the identity and confirmation of the farmers and genuineness of the transaction which cannot be doubted and treated as unexplained money u/sec.69A of the Act. The learned Authorised Representative of the Assessee has submitted that as per the provisions of Andhra Pradesh Tenancy Law [Tenancy & Agricultural Lands] Act, 1950, a lease agreement is executed to protect the rights of the tenant and the land lord but it is not mandatory requirement to enter into a written agreement. Therefore, in practice, only a oral
7 ITA.No.1767/Hyd./2025 agreement is enough to let out or lease out the agricultural land to the farmers. The Andhra Pradesh Tenancy Law [Tenancy & Agricultural Lands] Act, 1950 does not require a registered lease agreement as a mandatory pre-condition to start the cultivation. The Act recognized tenancy based on actual cultivation/possession even without a written lease deed. The assessee has explained all the details and sources of the cash deposit in the videoconferencing meeting on 11.03.2024. However, the Assessing Officer has not taken into consideration the hearing through videoconferencing while passing the impugned order u/sec.143(3) of the Act. Thus, the learned Authorised Representative of the Assessee has submitted that once the assessee has explained the source of deposit in the bank account with supporting evidence comprising of land holding of 35.96 acres, confirmation of the farmers who taken-over the land on lease and payment of the lease rental to the assessee in cash which is also reflected in the cash flow statement filed by the assessee then the addition made by the Assessing Officer and 8 ITA.No.1767/Hyd./2025 confirmed by the learned CIT(A) is not justified and the same is liable to be deleted.
5. On the other hand, the learned DR has submitted that the Assessing Officer has asked the assessee to produce the lease deed. However, the assessee failed to produce the lease deed and therefore, the assessee failed to prove that the agricultural income as claimed by the assessee is earned in the shape of lease rent from the alleged farmers. He has further submitted that in the earlier years the assessee has declared agricultural income only to the tune of Rs.3.5 lakhs. However, for the year under consideration the assessee has claimed the agricultural income of Rs.40,90,000/- which is disproportionate to the income declared by the assessee in earlier years. The learned DR has further submitted that the Assessing Officer has duly considered the reply filed by the assessee and noted that the assessee has not claimed agricultural income during the year under consideration in the return of income filed and only when the Assessing Officer in the scrutiny assessment issued a show cause notice regarding the cash deposit of Rs.40,90,000/-, the assessee
9 ITA.No.1767/Hyd./2025 has not provided any supporting documentary evidence to substantiate the claim that the source of the said deposit is agricultural income or sale of agriculture proceeds. The assessee has not provided any bill and voucher particularly, what he has sold the agriculture produce. The documents produced by the assessee proved only the agricultural land owned by the assessee but the same is not the proof of agricultural income as per the Income Tax provisions. He has relied upon the Orders of the authorities below.
6. We have considered the rival submissions as well as relevant material on record. The Assessing Officer has admitted the fact that the assessee has provided RTC copy and the documents of ownership of the agricultural lands as well as certificate issued by the Tahsildar regarding the agricultural income from the land holding of 35.90 acres. However, the claim of agricultural income was denied by the Assessing Officer on the ground that the assessee has not produced the lease agreements. The relevant finding of the Assessing Officer at pages 25 and 26 of the assessment order is as under:
10 ITA.No.1767/Hyd./2025 6.1. The Assessing Officer has acknowledged the filing of the confirmation from the farmers along with PAN. The 11 ITA.No.1767/Hyd./2025 copies of the confirmations are placed at page nos.325 to 336 of the paper book as under:
12 ITA.No.1767/Hyd./2025 13 ITA.No.1767/Hyd./2025 14 ITA.No.1767/Hyd./2025 15 ITA.No.1767/Hyd./2025 16 ITA.No.1767/Hyd./2025 17 ITA.No.1767/Hyd./2025 18 ITA.No.1767/Hyd./2025 19 ITA.No.1767/Hyd./2025 20 ITA.No.1767/Hyd./2025 21 ITA.No.1767/Hyd./2025 22 ITA.No.1767/Hyd./2025 6.2. Therefore, the assessee produced the confirmation along with copies of Aadhaar card and given the PAN of the some of the parties as stated by the Assessing Officer in the assessment order. However, the Assessing Officer observed that the PAN will not prove that they are farmers. The Assessing Officer insisted on the lease agreement and in the absence of the lease agreement, the claim of the assessee was rejected and the entire amount of deposit of Rs.40,90,000/- was added to the total income of the assessee u/sec.69A of the Act. We further note that the assessee also produced cash flow statement before the Assessing Officer along with the agricultural income certificate. The assessee is an individual and having only the income under the Head “Salary” being pension received from the Government [Railways]. Therefore, the production of the cash flow statement by the assessee itself demonstrates the maintenance of the record by the assessee regarding the cash transactions of receipt and payment as well as deposit in the bank account. A copy of the cash flow statement is placed at page no.314 as under:
23 ITA.No.1767/Hyd./2025 6.3. The Assessing Officer has not disputed the entries in the cash flow statement and not conducted any enquiry to prove the contrary. In case the Assessing Officer has doubts 24 ITA.No.1767/Hyd./2025 about the genuineness of the claim and confirmations given by the third parties regarding the land of the assessee taken on lease and payment of lease rentals, then the Assessing Officer ought to have conducted a proper enquiry to reach to the conclusion about the correctness of the claim. A mere suspicion about the correctness of the claim of the assessee cannot be a ‘reason’ to treat the said amount as unexplained money by ignoring the documentary evidence produced by the assessee. We find force in the submissions of the learned Authorised Representative of the Assessee that giving the land to the farmers for cultivation and agricultural operations on lease a written lease agreement is not a mandatory condition. Therefore, once the parties have accepted the fact of giving and taking the land on lease, then rejection of claim only on the ground of non-production of the lease agreement is not justified. The lease agreement is relevant document when the assessee cannot produce the confirmation of the other party. Further, the agricultural income of Rs.40,90,000/- from 35.90 acres of land is also not an unreasonable excessive claim. Accordingly, in the facts and 25 ITA.No.1767/Hyd./2025 circumstances of the case as discussed above, we are of the considered opinion that once the assessee has discharged his onus by producing the relevant supporting evidence to explain the source of deposit in the bank account, then in the absence of any contrary facts or material brought on record by the Assessing Officer, the claim of the assessee cannot be rejected. Hence, the addition made by the Assessing Officer is highly arbitrary and unjustified and the same is deleted.
In the result, appeal of the Assessee is allowed.
Order pronounced in the open Court on 06.02.2026.